Welcome back to campus and to a new term at the CSU. There have been
many developments at the systemwide level since I wrote to you last, so
let me go straight to the news:

2001/02 (Current Year) Budget: As I reported to you last fall,
the state's budget situation remains grim, and the outlook changes almost
daily. As for the 2001/02 (current) budget, the governor has just given
final approval to a package of budget cuts that includes a $29.5 million
budget cut for the CSU. This amount is less than the $35 million in reductions
that we expected back in December. The $29.5 million includes natural
gas funding reductions of $20 million and undesignated cuts of $9.5 million.
These cuts will be equally distributed among all of the campuses and the
Chancellor's Office on a proportional basis.

2002/03 Budget: On Jan. 10, Gov. Davis released his proposal for
the state's 2002/03 budget. In a tough budget year, the CSU fared about
as well as could be expected. The governor has proposed a $116.9 million,
or 4.5 %, general fund increase, for the CSU. The good news is that the
proposal would fully fund our projected enrollment, providing an $87.9
million increase for the additional 12,030 full-time equivalent students
expected to enroll in 2002/03. This enrollment funding increase ensures
that the CSU will be able to serve these new students with the faculty,
staff, and course offerings they need. However, the budget still leaves
us with certain unmet needs. Although the CSU requested a 4 percent employee
compensation increase, the governor's budget allows for a $22.4 million,
or 1 percent, increase. We will continue to look for opportunities to
make the case to the legislature and the governor for more funding in
this area. For more information, see www.dof.ca.gov/HTML/BUD_DOCS/Bud_link.htm
or www.calstate.edu/budget/.

Remedial Education: Last month, the CSU released its annual report
on remedial education. The report showed mixed results. On the one hand,
we have made great progress in our K-12 outreach programs and in our efforts
to help students reach proficiency in one year. On the other hand, more
than half of our incoming freshmen still need remedial education. I believe
that our K-12 outreach efforts are the key to improving this situation,
and that once those students who are receiving this assistance reach the
CSU we will see greater improvements. CSU faculty and staff also are responding
to new legislation calling for the development of an augmented 11th-grade
standards test in mathematics and English that could serve to exempt students
from our placement tests. This assessment would give students an early
signal on college readiness and would open up the entire senior year to
complete any additional work. For more information, see www.asd.calstate.edu/performance/remediation.shtml.

External Support: Last month the CSU released its annual report
on external support, which shows how much non-state funding the CSU secured
in the form of special revenue and private voluntary support. I am pleased
to report that our total external support rose to a record $916.4 million
in fiscal year 2000/01, a 4 percent increase from the previous year. CSU
campuses raised $668.2 million in special revenue from sources such as
sponsorships, bequest expectancies, pledges, contracts, grants, property
transfers and income from endowments. Donors provided $248.2 million in
voluntary support, which includes gifts from alumni, parents, corporations,
foundations, friends, and other organizations. This support is critical
to our ability to maintain excellence in the system, and I am especially
pleased that our universities did so well during such a difficult economy.
Many thanks to our university advancement teams and the faculty, deans,
and presidents they work with to garner this support. For more information,
see www.calstate.edu/BOT/agendas/Jan02/InstAdv.pdf.

Bargaining Update: Since I last wrote, the CSU reached agreement
with the California State Employees Association (CSEA) to provide a 2
percent general salary increase retroactive to July 1, 2001 for staff
employees throughout the system, while both parties continue to negotiate
the terms of a new contract to begin in fiscal year 2002/03. I am pleased
to report that all February paychecks for CSEA employees reflected this
increase, and all CSEA employees will have received retroactive paychecks
by the end of the month. Negotiations with the California Faculty Association
(CFA) continue to be at an impasse. We have scheduled fact-finding hearings
for Feb. 13, 14, and 15. Again, I am very disappointed that we have not
reached an agreement on fiscal year 2001/02 salary increases. All other
CSU employees, including CSU presidents, have now received a 2 percent
increase. I sincerely hope that we can come to an agreement as soon as
possible so that our faculty members can also receive their well-deserved
retroactive salary increases.

Gubernatorial Debates: The CSU has been selected to host a series
of debates in preparation for California's upcoming gubernatorial election.
San Jose State was the site of the first Republican debate last month;
Cal State Long Beach will host a second Republican debate on Feb. 13 at
7 pm. I am very proud that we were chosen to host these debates because
educating the public is an important part of the CSU's mission. Our campuses
have gone all out to showcase the CSU at these debates, holding pre-debate
panels featuring leading CSU faculty members who have helped frame what
is at stake for California. For more information, see http://www.calstate.edu/pa/news/2002/debateLB.shtml.

CSU Leader: Many of you have asked about how you can receive more
information about CSU news and events. I want to remind you that the CSU
publishes a weekly e-mail newsletter called "CSU Leader," which offers
timely news and updates, plus links for more information. Anyone can subscribe,
and I encourage you to do so if you are interested. For more information,
see http://www.calstate.edu/CSULeader.

As always, you are welcome to e-mail me your questions and comments about
this message at csu-chancellor@calstate.edu.
While I am unable to respond to each message individually, I will post
the answers to the most frequently asked questions on our website. They
will be posted no later than Feb. 26 at http://www.calstate.edu/Executive/.
We keep these messages, your questions, and the responses on this page
so that you can view them at any time.

Thank you again for all that you do to make the California State University
an outstanding institution of higher education.